Home Depot Expands Fast Food

ATLANTA -- Two rolls of electrical tape, a three-quarter inch pvc pipe, a box of deck screws and make mine light and sweet with a jelly doughnut to go.

Home Depot, always with a strong appetite for more customers, said its adding food to its stores to lure hungry shoppers. The Atlanta-based home improvement retailer said Tuesday it plans to expand a pilot program of locating Dunkin' Donuts shops inside stores. Dunkin' Donuts, which opened its first locations inside Home Depot stores last year, has three shops in Home Depot stores in New England, The Atlanta Journal-Constitution

Home Depot also said it is testing small-scale McDonald's stores in "a few locations" in the Los Angeles area. However, the McDonald's pilot, which involves limited menu offerings, is losing momentum and is not expected to be expanded anytime soon. Food sales could provide Home Depot a boost in its search to increase sales and traffic at its stores. As the home improvement landscape approaches saturation, companies such as Home Depot and Lowe's, its top competitor, are seeking ways to differentiate themselves.

"The company is carefully evaluating the sale of food in Home Depot stores," Home Depot spokesman David Sandor told The Journal-Constitution. "The potential for Dunkin' Donuts expanding beyond the New England stores is a lot greater."

Dunkin' Donuts and its coffee and doughnuts have more appeal to Home Depot customers than McDonald's, which appeals more to families, said Stephen Deedy, vice president of retail consulting at Cap Gemini Ernst & Young in Atlanta. Having McDonald's inside Home Depots is "a bit antithetical" to the chain's reputation of serving the rugged do-it-yourself customer, he said.
Independent hot dog and hamburger vendors operate outside some Home Depot and Lowe's locations, but the Dunkin' Donuts-Home Depot partnership represents the potential for a national relationship. A Home Depot in Atlanta has a Fuddruckers inside. In the past, Home Depot also has had Mrs. Winner's and McDonald's restaurants in stores in the metro area.

The Home Depot-Dunkin' Donuts partnership's potential for growth is large. Home Depot has more than 1,400 stores in the United States. Based in Randolph, Mass., Dunkin' Donuts has nearly 4,000 locations in 38 states. Both Dunkin' Donuts and Home Depot also have stores outside the country.

"What we'll cook up in terms of a national basis, I'm not sure," Sandor said.

Dunkin' Donuts said Tuesday it is "excited" by the prospect of a presence in more Home Depots. Customers have been "very receptive" so far, the doughnut maker said.
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